KATHMANDU: The tax administration has suspected some 3,600 firms of evading Value Added Tax (VAT).
It has been revealed that most Permanent Account Number (PAN)-registered firms have been evading their VAT compliance though their yearly transaction is more than Rs 2 million, according to director general at the Inland Revenue Department Tanka Mani Sharma.
A majority of traders and firms in the country are taking consumers for a ride to evade VAT by not issuing invoices to limit their transaction amount within Rs 2 million, he said, adding that the trend of hiding the actual transaction amount had spread across the country and had become chronic.
All the firms have submitted false statements regarding their income and transactions, added Sharma. “The department will collect the revenue of the concealed amount along with the fines from all the firms after the investigation is completed.”
The department had long been suspecting firms of concealing transactions, he said. “Primary investigations of 3,600 firms have proved the suspicion to be true.”
Earlier, the department had predicted that nearly half the PAN-registered department stores, malls and outlets hide their transactions to escape tax compliance.
The total number of firms which are under the scanner for VAT evasion has reached 4,400 with the investigation of an additional 3,600 firms, Sharma informed.
Revenue worth millions will be generated through the investigation, he said. “The department, while doing a system cross verification, came to know that the firms that have claimed to buy from certain firms have never bought anything from them.”
The department will mobilise all the 22 Inland Revenue Offices across the country to investigate those firms as soon as possible, said Sharma, adding that the department brought all these firms under its radar after it found a mismatch between the accounts filed by wholesalers and big traders, and their buyer firms and traders at the time of online tallying.
If the firms are found to be guilty they will then have to pay 13 per cent VAT and 25 per cent income tax and an equal amount in fines.